Japanese firms love to invest in India. Here’s why
India remains the top choice for Japanese manufacturing firms looking to invest abroad, Itagaki Shinichi of the state-owned Japan Bank for International Cooperation (JBIC) said in an interview. Itagaki, who directs JBIC’s strategic and geopolitical research, said political pressures and negative images had made China less attractive for Japanese firms, benefiting India. Itagaki said the proportion of Japanese companies with business plans in India has jumped from around 35% in 2021 to 45.8 in 2023, according to a JBIC survey of Japanese manufacturing enterprises conducted in 2023.
The same survey found that India was the most promising country for overseas business for Japanese firms, with China dropping to third place in the rankings. Nearly half (48.6%) of the firms found India to be the most promising destination while Vietnam finished second with 30.1%. China finished third at 28.4%, followed by the US with 27.1% support.
“All the news that is coming in from China is negative to the investment climate. So India was the top choice for 40.3% of firms last year and is 48.6% this year. Meanwhile, China was at 37.1% and this year, it is at 28.4%.
India gained 10 percentage points and China lost 10 percentage points," said Itagaki. “As for the US, the companies understand the market potential in the longer term but over the next three years, high inflation and also the labour costs make Japanese companies a little bit hesitant to look at the US. While India is very important as a market.
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